Prudential 2003 Annual Report Download - page 54

Divested Businesses
Our income from continuing operations before income taxes includes results from several businesses that have
been or will be sold or exited that do not qualify for “discontinued operations” accounting treatment under GAAP. The
results of divested business are reflected in our Corporate and Other operations. A summary of the income from
continuing operations before income taxes for these businesses is as follows for the periods indicated:
Year ended December 31,
2003 2002 2001
(in millions)
Property and casualty insurance ................................................................... $(347) $ 71 $ 200
Prudential Securities capital markets ................................................................ 287 (36) (159)
Gibraltar Casualty .............................................................................. (81) (79) —
Other divested businesses ........................................................................ (41) 16 11
Total income (loss) from continuing operations before income taxes ...................................... (182) (28) 52
Less: Realized investment gains (losses), net ......................................................... 3 (13) (6)
Divested businesses excluding realized gain (losses), net ................................................ $(185) $(15) $ 58
Property and Casualty Insurance
In the fourth quarter of 2003, we completed our previously announced agreements to sell our property and
casualty insurance companies that operate nationally in 48 states outside of New Jersey, and the District of Columbia,
to Liberty Mutual Group (“Liberty Mutual”), as well as our New Jersey property and casualty insurance companies to
Palisades Group. Results of the property and casualty insurance operations have been reclassified as a divested
business for all periods presented.
Historically, the Individual Life and Annuities segment has been compensated for property and casualty insurance
products sold through its distribution network. Following the sale of the property and casualty insurance operations,
Prudential Agents will have continued access to non-proprietary property and casualty products under distribution
agreements entered into with the purchasers of these businesses, and therefore, the Individual Life and Annuities
segment will continue to be compensated for sales of these products, although the extent of these revenues cannot be
predicted. In addition, certain expenses incurred at the corporate level that previously were allocated to the Property
and Casualty Insurance segment have been reclassified to Corporate and Other operations, for all periods presented.
These expenses, which we will seek to mitigate over time, will continue to be absorbed by Corporate and Other
operations in future periods.
In addition, in 2003 we sold our specialty automobile insurance business and entered into an agreement to sell our
work-place distribution property and casualty insurance operations, which closed in the first quarter of 2004. The
results of operations for these businesses are included in “Loss from discontinued operations” for all periods presented.
Operating Results
The following table sets forth the Property and Casualty Insurance segment’s operating results for the periods
indicated:
Year ended December 31,
2003 2002 2001
(in millions)
GAAP results:
Revenues ................................................................................ $1,569 $1,815 $1,707
Benefits and expenses ...................................................................... 1,916 1,744 1,507
Income (loss) from continuing operations before income taxes ...................................... $ (347) $ 71 $ 200
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